Ying Construction Company Entered into a Contract to Build a New

question 1

Multiple Choice

Ying Construction Company entered into a contract to build a new airport terminal for $2,500,000. Construction commenced on August 1, 2020, with a planned completion date of December 31, 2022. A summary of the costs, billings, and collections is provided below: $$\begin{array} { | l | r | r | r | } \hline & \mathbf { 2 0 2 0 } & \mathbf { 2 0 2 1 } & \mathbf { 2 0 2 2 } \\\hline \text { Costs incurred during the year } & 500,000 & 700,000 & 1,100,000 \\\hline \text { Estimated costs to complete at year end } & 1,500,000 & 1,200,000 & 0 \\\hline \text { Billings during the year } & 440,000 & 1,000,000 & 1,060,000 \\\hline \text { Cash collections during the year } & 400,000 & 900,000 & 1,200,000 \\\hline\end{array}$$ Ying uses the percentage of completion method. What amount would appear as accounts receivable on Ying's December 31, 2021 balance sheet?

• A)$100,000
• B)$140,000
• C)$1,000,000
• D)$1,400,000

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Definitions:

Fixed Assets

Tangible or intangible items owned by a business that are used over a long period of time for the operation of the business, such as buildings, machinery, or equipment.

Working Capital

The disparity between an organization's immediate assets and liabilities, revealing its short-term fiscal stability and operational effectiveness.

Short-Term Liabilities

Financial obligations of a business that are due to be paid within one year.

Spontaneously

Occurring without external cause, acting or done impulsively and without premeditation.